Sarkozy unveils package to help struggling households

French President Nicolas Sarkozy unveiled a €2.6 billion package of tax breaks and social benefits focused on aiding struggling families and the unemployed at a summit with France's trade unions on Wednesday.

Union leaders met with French President Nicolas Sarkozy to discuss new government measures aimed at buffering the effects of the slumping French economy on the country’s lower-income workers and households.

The delegation included leaders from the five largest employee unions, as well as from the three organisations representing France’s employers.

In a speech to the nation following today's meeting, Sarkozy announced plans for a financial aid and benefits package worth between 1.65 billion and 2.65 billion euros focusing on low-income families and the unemployed. A separate 2.5 billion to 3 billion euros was proposed for a social investment fund, half of which would be financed by the state.

"France is facing an economic crisis of unprecedented scale that is a source of legitimate worry for the French people," Sarkozy said in remarks after the meeting. The president acknowledged the widespread fear of unemployment in particular. The French "are frightened of losing their jobs, or that those close to them will lose theirs," he said.

First propositions

The new proposals include a temporary 75 percent gross-pay provision for unemployed workers and one-off payments of between 400 and 500 euros for those who were employed for between two and four months before being laid off. The package also calls for a two-thirds reduction of income taxes for the four million households in the country's lowest tax bracket.

The Sarkozy plan introduces several provisions on offering professional training, particularly to unskilled workers and to young people entering the job market. Companies benefiting from the stimulus package will be asked to introduce policies to train and recruit more young workers.

The French president rejected union calls to increase the minimum wage, however, saying that an increase would "aggravate" the challenges facing small businesses.

A proposal to allow profit sharing between investors, employers and employees was rejected by the employers' unions.

This new package of measures marks something of a departure from Sarkozy’s previous moves, which until now have focused on reviving the economy primarily through investment. FRANCE 24’s French politics editor Melissa Bell says Sarkozy is now making moves “in the direction of the unions, towards kickstarting [the economy] through consumption as well.”

Sarkozy’s government aimed, in part, to counter the perception that the state's economic stimulus efforts only considered the woes of bankers and employers.

Unions want more concrete measures

A pan-union strike on Jan. 29 gathered an impressive turnout of at least 1.4 million worried French workers across the country (unions claim 2.5 million people took part) and once again highlighted the influence of France's unions.

Employee union representatives presented Sarkozy with a list of demands focusing on increasing both workers' wages and spending power. But employer unions said focusing on generalised consumer power was misguided, and defended continued state investments to keep companies operating.

The outcome of the president's meeting with the unions was eagerly awaited, and Sarkozy unveiled the resulting proposals on prime-time television. “If he’s able to show that he has come to an agreement, on at least some but not all the points, it could be an important moment for the president,” Bruno Jeanbart, director of polling for OpinionWay, told FRANCE 24.

François Chereque, head of the CFDT union, called the government's measures "insufficient". Bertrand Thibault of CGT, France’s biggest union, said the group is ready to keep pressing until their demands are "fully met".

For now, a nationwide strike called for March 19 is expected to go ahead, despite the government's attempts to appease the country's workers.